Forex Day Trading: 3 Mistakes To Avoid

What is Day Trading?

Foreign Exchange Deals that are generally closed on the same day is called Day Trading. Short Term trading is attractive as it offers higher returns but at the same time is dangerous as well. With the advent of internet technology, day trading has become extremely popular among investors and stock market players. Normally Forex day trading involves buying a currency at the prevailing rate and which you feel will rising up towards the end of the day. As soon as the currency value rises you sell it off making a profit for yourself.

What are the mistakes to avoid in Forex?

Forex trading, however enticing it may seem is not fool proof. People usually indulge in cross currency trading like USD to EUR or vice versa. The trick here is to choose your risk quotient by following market trends and doing some research on your own. No matter how much perfect you think your strategy is, you are always advised to tread with caution.

1) Forex Day Trading is not your shortcut to wealth

No matter what you have read on the internet or what stories your other trader pals have told you, you cannot become a millionaire overnight with Forex Trading. However, we are not completely discouraging you as there are many traders who have made their fortunes and many others who still are dependent on it as a means of livelihood. What you need to develop is trading acumen which will help you gain profits.

2) Do not risk more than 1% of Capital

The higher you risk, higher the gains, this strategy is not overtly applicable to day trading Forex. A successful trader will never risk more than 1% of his capital on a single trade. By adopting this method, you ensure that in event of a loss the amount is not too significant.

3) Keeping unrealistic expectations

While starting your trading be fully aware of the market conditions and what you are getting into. Do not blindly foray into it just because somebody promised a windfall. Make sure that you have sufficient financial knowledge about day trading, the terms that are used, what to look out for etc. If you think you will have 5000 USD that will yield you 30000 USD then than it not going to happen. Take help from an expert who is dealing into day trade Forex to learn the finer nuances of the game.

Conclusion

When trading Forex, you should avoid:

Thinking it is a shortcut to wealth overnight, you can be successful in Forex trading if you learn and improve every day.
Risking more than 1% of your capital.
Keeping unrealistic expectations.

Get our trading books. The best thing is that they come with a 100% Money Back Guarantee. Read these books cover to cover, and if the strategies do not work for you within 30 days, we will refund your money, and you can keep the books too!

Binary Options Vs Forex

Binary Options Vs Forex

Before you start trading it is important that you are aware of the differences between binary options vs Forex, so that you are able to choose the trading method that suits your individual style and preference.

Forex trading is speculating the value of one currency with the other. The currencies are always traded in pairs. In binary options the trader predicts whether the price of the underlying asset increases or decreases over a period of time.

Margin

Margin can be used to trade in Forex. Brokers decide the margin that can be used in trading. It can be 1:200, 1:400 or 1:500. This allows traders to increase the investment that they can make in the market so that they are able to make a larger trade and profit even with a small account.

In binary options margin is not used for trading. It is still an attractive option for traders as they may be able to make big profits. You never get a margin call in this trade.

Payout and losses

The maximum profit that you can make from a Forex trade can never be known. All that you may be able to do is to set a stop order so that you are guaranteed a percentage of profit when you stop the trade at a particular time.

You may also be able to manage loss in the same way. In binary options the trader is aware of the loss and payout percentage before they place a trade. The payout may vary depending on the broker.

Closing positions

You may be able to choose when to close a position in Forex. It can be closed whenever the market is open and the broker has to execute it immediately.

In binary options the trader has to choose when the option may expire (one hour or one week) before placing a trade. The trade closes automatically at the expiry time. You may be able to get predetermined expiry times on different types of options from brokers.

Order types

Many order types are offered in Forex trading. Buy, sell, limit, stop, trailing stop and hedge orders are the popular types. Binary options offers five order types and they include high and low, boundary options, touch and no touch, 60 second options and option builder.

Trade size

Brokers allow traders to trade in micro lots. These can be 1,000 units of the base currency. The maximum amount that can be traded is also determined by the broker. In binary options also the minimum and maximum trade size is determined by the broker. The trading amount can be as less as $5 and as high as $5,000.

When you become aware of the differences between binary options vs Forex, you may be able to choose the trading platform you want to trade and make profits easily.

4 Tips for Making Your Forex Journal Actionable

4 Tips for Making Your Forex Journal Actionable

Keeping track of your Forex trading – whether digitally or with pen and paper – is critical for your growth as a trader. And for many, the start of a new year is the perfect time to revisit the previous 12 months of trading. Looking back on your trades will help you determine what worked, what didn’t and what could use improvement.

Yet, it’s difficult to know what you should do with your personal data. What exactly should you be looking for? And how can you use your journal to improve your trading? Here are a few quick tips for using your yearly trading data to improve your strategy:

1. Look Over All Your Data Once

Start by examining the full year of data. Look for your milestones: Your biggest wins, your biggest losses, and missed opportunities. Also, be sure to calculate your profits, losses, and the bottom line. This will help you set a baseline for your trading and serve as the point that you want to improve upon in the coming year.

2. Develop Goals For Moving Forward

Once you’ve examined your trading data, you can begin to set goals for the upcoming year. This will ensure that the data you’re reviewing becomes actionable. So how exactly should you set goal? Look for common mistakes you made over the previous year. Did you miss out on profits because you entered trades too late? Focus on how you can adjust your strategy to enter trades earlier.

3. Be Sure to Include Positive Data

As you look over the previous year, the negatives will probably jump out at you. But there’s always more to the data. Be sure you are incorporating positive points into your analysis. You shouldn’t just focus on your mistakes, your biggest losses, or your missed opportunities. You must include the positives: Your most profitable trades, your clever trading strategies, the times you entered trades effectively, your winning trade streaks, etc. By balancing your losses and wins, you’ll be able to better focus down on the areas you need to improve.

4. Keep Better Records

Moving forward, you should make it a goal to keep more thorough trading records. Are you incorporating the fundamental and technical analysis that helped you determine a trade? Do you note the thinking that you used to enter a trade? If not, you should be. The more information you provide in your Forex journal, the easier it will be to improve. Why? Numbers alone only tell one side of the story. But incorporating the steps, analysis and thoughts that encouraged you to enter a trade will help you spot the holes in your thinking.